RTTNews - Following a move to the upside at the opening bell, stocks are seeing continued strength in mid-morning trading on Monday amid a pick up in global economic sentiment. The major averages are all in positive territory by solid margins, looking to build on last week's four-day winning streak.
The strength in the markets is partly due comments from a number of central bankers over the weekend at Jackson Hole, Wyoming indicating that interest rates are likely to remain fixed for some time despite some signs of economic stabilization.
At the conference, Federal Reserve Chairman Ben Bernanke said, Economic activity appears to be leveling out, both in the United States and abroad. Bernanke also noted that the prospects for a return to growth in the near term appear good.
Some traders remain cautious, however, as economist Nouriel Roubini, who predicted the magnitude of the recent financial troubles, said that he sees a big risk of a double recession in an article for the Financial Times.
Roubini stated that the global economy might bottom out in the second half of the year and that the economies in the U.S and other European countries might witness anemic or below trend growth for at least a couple of years.
Automakers are also in focus today following the announcement by the U.S Administration that the popular cash for clunkers program will be drawn to a close today.
In corporate news, drug maker Warner Chilcott (WCRX) announced that it has agreed to acquire the prescription drug business of Procter & Gamble (PG) for an up-front cash payment of $3.1 billion. The transaction is expected to close by the end of the 2009 calendar year.
The major averages have seen some choppy movement in recent trading, holding near their best levels of the day. The Dow is currently up 64.77 at 9,570.73, the Nasdaq is up 13.45 at 2,034.35 and the S&P 500 is up 8.12 at 1,034.25.
Airline stocks are turning in some of the day's best performances, as reflected by the 3.8 percent gain being shown by the NYSE Arca Airline Index. With the advance, the index has climbed to its best intraday level in seven months.
Continental Airlines (CAL) is helping to lead the sector higher, with the airline currently posting a 7.5 percent gain. At its high for the session, Continental was at four-month intraday high.
Further, steel, gold and oil service stocks are also posting strong gains, leading the way higher in the resource sector.
The NYSE Arca Steel Index and the Philadelphia Oil Service Index are up by 2.3 percent and 1.8 percent, respectively, while the NYSE Arca Gold Bugs Index is posting a 1.6 percent gain.
The strength among resource stocks comes amid an increase in commodity prices on the NYMEX, where oil has jumped by $0.74 to $74.63 per barrel and gold has risen by $1.30 to $954.50 per ounce.
Banking, tobacco, semiconductor and electronic storage stocks are also posting strong gains, reflecting the day's broad based buying interest.
Stocks Driven By Analyst Comments
Ashland (ASH) is on the rise in following an upgrade by KeyBanc Capital Markets, which raised its rating on the stock from Hold to Buy. The broker said the chemical firm stands to gain from increased profitability at its Valvoline motor oil division. The stock is up by 3.7 percent, rising to its best intraday price in well over eleven months.
Advanced Micro Devices (AMD) is also gaining after being upgrade to Buy from Hold at Citigroup. The broker cited the potential for the firm to boost its market share. The stock has surged up by 9.2 percent, climbing to its best intraday level in one month's time.
On the other hand, Natural Resource Partners (NRP) is retreating after Citigroup downgraded the stock from Hold to Sell. The stock is down by 5.1 percent, falling to a five and a half month intraday low earlier in the session.
In overseas trading, stock markets across the Asia-Pacific region closed notably higher on Monday. Japan's benchmark Nikkei 225 Index surged up by 3.4 percent, while Hong Kong's Hang Seng Index rose by 1.7 percent.
The major European markets are also moving higher, with the German DAX Index and the French CAC 40 Index rising by 0.9 percent and 1 percent, respectively, while the U.K.'s FTSE 100 Index is up by 0.7 percent.
In the bond markets, treasuries are showing modest weakness amid the strength on Wall Street. Subsequently, the yield on the benchmark ten-year note is trading at 3.569 percent, posting a gain of 1.3 basis points.
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